Cheyne Capital’s hedge fund focused on Europe, the Middle East, and Africa is significantly increasing its exposure to the United Arab Emirates (UAE), citing the country’s stability as a buffer against potential fallout from US President Donald Trump’s policies, according to a report by Bloomberg.
The report cites fund manager Carl Tohme as highlighting that the UAE’s currency peg to the dollar is one of the key factors making it an attractive equity market, noting that this peg offers a level of security in repatriating local equity gains, a benefit that many emerging markets can’t provide due to vulnerability to sudden currency fluctuations. While several developing countries use currency pegs, Tohme pointed out that the UAE’s financial strength gives it a unique ability to maintain this peg effectively.
The Cheyne EMEA Fund delivered a 13.1% return last year, outperforming the MSCI benchmark for the region by a wide margin. This performance was bolstered by a $73bn stock-market rally driven by robust UAE economic growth and government-backed support for domestic companies. Key contributors to the fund’s success included Salik, the toll operator whose shares surged by 74%, and Emaar Properties, a state-backed developer that saw its stock climb by 62%.
Tohme believes that in a global environment marked by uncertainty, the UAE’s stable currency, low debt-to-GDP ratio (under 30%), and its strong financial infrastructure make it a highly appealing market. “In times of global fluidity, such as geopolitical shifts, changes in US trade policies, or the direction of US monetary policy, having a currency pegged to the dollar and stable fiscal fundamentals offers an attractive risk-reward profile,” Tohme explained.
Cheyne Capital, a UK-based alternative asset manager with a strong track record in real estate, has been steadily increasing its exposure to the Middle East. Apart from Salik and Emaar, Tohme expressed confidence in the long-term prospects of companies like Adnoc Gas and Aldar Properties, both of which stand to benefit from ongoing population growth in the UAE. “Continuing reforms, a growing population, no FX risk, visible earnings for many companies, and attractive dividend yields are key factors driving our positive outlook on the UAE,” Tohme added.
The firm is also eyeing opportunities in Saudi Arabia, particularly in companies tied to the government’s ambitious Vision 2030 strategy, which spans several key sectors, including entertainment, technology, and infrastructure. Despite challenges such as Saudi Aramco’s 15% loss in 2024, Tohme sees short-term negativity as an opportunity to enter these sectors at more favourable valuations. “While the market faces some short-term challenges, the long-term secular growth story remains intact,” he said.
Cheyne Capital is also backing Turkey, where the fund has seen success in both bank stocks and local bonds. While 2024 was a challenging year for Turkish equities, Tohme noted that the country’s commitment to orthodox monetary policy and efforts to reduce inflation should support future growth.
